Does anyone have experience with an operator who sold its oil to an affiliate? My lease specifically says that I am to be paid on the proceeds of the first non-affiliate, but I have not been given the contract between the affiliate and the purchaser to determine if the operator had some deal with the purchaser. It’s my understanding that sometimes these affiliate sales can help mask deductions even with no-deduction clauses.
Many thanks in advance for your help!
It is wise to be weary, have an attorney in the state of production look into it. How long has this been going on?
Thanks for the response, Richard.
I believe that it has been going on since 2014, when oil prices were quite high, thus even if the marketing’s arm take is a small percentage, the aggregate sum could be really high. I have some of the best attorneys in Texas, but they are expensive and I try to gather information for them as much as I can.
The attorney for the corporation stated that the marketing arm paid exactly the same as the purchaser but failed to provide info to prove this claim, despite the fact that my lease requires that they provide all information pertaining to my leases. The operator has not been forthright with providing the contracts that actually spell out the relationship between their operating arm, their marketing arm and their purchasers. It’s a large corporation so I will begin reaching out to other royalty owners, such as my “Minerals neighbors,” to alert them of the marketing arm involvement, if I don’t get answers soon.
I looked at the Texas Railroad Commission Web site. Normally the operator names the purchaser on one of the public forms. I noticed that my operator left that line blank, which caused me to ask them why. I am still waiting on the answer… I suggest that all royalty owners check the purchaser to make sure that their royalties are calculated on the proceeds received by an arms-length sale.